5 Rate-Proof REITs Paying Up to 12%?  3 to Buy, 2 to Avoid

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“First-level” investors – those who buy and sell on headlines – mistakenly believe that real estate investment trust (REIT) profits will suffer if rates rise.

Sure, in the short run, the “rates up, REITs down” theory puts on quite the show. When the 10-Year Treasury’s yield rises, REITs usually fall. And when its yield drops, REITs usually rally. This inverse relationship tends to hold up over multiple days, weeks and even months:

A Short-Run Seesaw Between REITs and T-Bill Yields

The theory backing up this price action says that, because REITs borrow money to grow their property empires, they need cheap cash.…
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If you hold any of these five risky REITs, you should sell them immediately. And put that money into two recession-proof bargains (paying up to 8%) that we’ll discuss shortly.

REITs aren’t always as safe as their dividends appear on paper. Consider Investors Real Estate Trust (IRET), which slashed its dividend by nearly half late last year. This wasn’t a sudden decision – it followed years of share declines as falling oil prices crushed rents across IRET’s markets.

IRET has now lost 40% in four years and seen its high-single-digit yield reduced to less than 5%. Even IRET’s brief recovery after the dividend cut has withered away, and shares are off double digits in 2017.…
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About Author

Brett

Hi, I’m Brett Owens – and I’m a financial junkie. My “problem” started incollege, when I got a little dose of the stock market – man, was I hooked…in no time, I was reading the Wall Street Journal religously.

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